When a trust is established, the grantor intends to convey a benefit to a designated person or persons. As a trust is written, it is important to have experienced attorneys to help draft the trust in a way that best considers state law and the needs of the beneficiary. It can continue to be a balancing act after a trust is administered, and reforms may need to be considered.

In the Massachusetts Appeals Court case of Needham vs. Dir. of the Ofc. of Medicaid (14-P-182), the Appeals Court reviewed whether or not it was appropriate for the Superior Court to go against the agency’s denial of long-term care benefits under the Commonwealth’s Medicaid program. The Superior Court judge had previously concluded that the reformed trust must be considered during the assessment of eligibility for long-term care benefits. The Appeals Court differed, reversing the lower court’s ruling and determining that the state agency, Masshealth, is bound by federal law that prohibits the recognition of the reformation of the trust within the statutory look-back period.

The beneficiary of the trust applied for MassHealth long-term care benefits when he was 64, disclosing two trusts on his application. One trust only held the family home, which was valued at over $400,000. The reviewing agency included this trust in its accounting for eligibility, due to the terms in the trust that directed the trustee to accumulate principal and use it for the benefit of the man. The state agency concluded that the man applying for benefits was ineligible because he had monthly assets in excess of the $2,000.00 limit. The beneficiary then went to probate court to remove the provision from the trust that prevented him from obtaining benefits. The change to the trust was approved by the probate court, but the hearing officer determined that the transfer of assets during the look-back period (after the beneficiary was in a nursing facility) caused the man to remain ineligible for benefits. The Superior Court reversed the hearing officer’s determination, focusing on the reformed trust.
In its decision, the Appeals Court looked to the origins of MassHealth, a state system that agreed to receive federal funding and follow the requirements of federal law. Financial need, under federal statute, can only be determined using the standards prescribed by the United States Secretary of Health and Human Services. The Appeals Court, after reviewing federal law, concluded that the reformation of the trust was a disqualifying event. The court considered the hearing officer’s assessment of the facts, which showed the trust was reformed in a look-back period. The Appeals Court felt the hearing officer did not commit any error in his application of federal law, reversed the Superior Court’s decision, and upheld MassHealth’s denial of benefits.

The Massachusetts estate planning attorneys at Karsner and Meehan have the experience you need to help you consider all the delicate and complicated matters of distributing an estate. For a free, confidential consultation, call our office today at 508-822-6600.